Is it worth refinancing my home at this rate 8.3%?
by Mortgage Rates on Saturday, October 2nd, 2010 | 10 Comments
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Interest rates have gone down so much, and refinancing is less of a risk for a bank. There is no reason why you should have to pay such a high rate. Call around, get a lot of quotes.
even though the original rate is lower, since you have a 2nd mortgage with a variable rate it would be worth it just to be able to combine both at a fixed rate!
No, you should not refinance unless the total average interest rate is at least 1% lower.
A better question is after only 1 1/2 years how could you have had to take out a second mortgage. It sounds like a better idea would be to sell your home and live in an apartment and get that all paid off.
Look again, that is not a good deal.
I only have to say, “Shop around”. Right now, 8.3% seems a little high. I would think that with the FED lowering interest rates here lately, that you could get a better deal. Also, find out what your variable rate is now. You may find that it is lower. Sometimes, depending on how the loan was drawn up, you can actually lock into a rate. This would be an ideal time to do that, if you haven’t already.
With essentially no equity, and lowering property values, you are asking for another 100% loan. Shop it around and get the best deal you can, why not?
I agree. Mortgage rates are incredibly low right now (I just purchased a new home at 5.33%). 8.3% seems extraordinarily high.
The only problem is that due to the the sub-prime mortgage crisis banks have significantly tightened their lending standards. How is your credit? Have you had any late payments in the last two years? If your credit is in good standing and your debt-to-income ratio is not totally out of whack, you may be able to find a better deal. I would shop around and see if you can’t find a better rate. It can’t hurt to look.
If your overall monthly payment will be lower I say go ahead and do it, even though the rate is a bit higher than your first your 2nd mortgage probably has a rate over 10 or 11%. If the payment isn’t any less than stick with what you have until you are a bit closer to the time when that 2nd will adjust rates, then refi 4 or 5 months beforehand to get out of that loan. Currently it’s impossible to refi if you don’t have at least 5% equity so that’s why no other lender can touch this. Yes, the rate is high but that may be due to other factors, such as credit rating, the high loan to value ratio, income, or debt ratio.
Refinances almost always cost you more in the beginning and in the long run.
You have to pay fees to refinance, and that gets tacked onto the loan. The loan is extended out longer so you get smaller payment, but even with a lower rate, you will probably pay at least 10% more in the long run.
The rule of thumb is never refinance unless the new interest rate is at least 2 percentage points lower, with no points paid.
Pay the minimum towards the lower interest rate loan, and as much as you can afford to the higher interest rate loan to get it paid off faster.
Try using http://Refinance-Today.info to get quotes from the top 4 lenders. I used their service and was able to lower my monthly payments considerably.